Report: Donor-Advised Fund Grants Exceed $15B for the First Time Ever

As we all know, a donor-advised fund is a vehicle of giving that has been around for some time. In fact, according to the Council on Foundations, donor-advised funds were introduced in the Pension Protection Act of 2006, and it defined these funds as an account “which is separately identified by reference to the contributions of a donor or donors; which is owned and controlled by the sponsoring organization, like a community foundation; and with respect to which a donor or person appointed by the donor has or reasonably expects to have advisory privileges with respect to investments of distributions.”

For the past 7 years, the National Philanthropic Trust has been closely following donor-advised fund trends by conducting in-depth research reports. While donor-advised funds have been around for over a decade, its popularity has been rapidly increasing over the past few years. The “2017 Donor-Advised Fund Report” showed a slower growth rate when compared years past, but showed significant growth, with grants from donor-advised funds exceeding the $15 billion mark for the first time ever. Additionally in 2016, contributions totaled $23.27 billion and charitable assets under management in donor-advised funds hit an all-time high of $85.15 billion—nearly a 10 percent increase from 2015.

The number of donor-advised funds grew 6.9 percent in 2016, totaling 284,965. In particular, individual donor-advised funds from single-issue accounts increased by 2.7 percent, those from community foundations increased 2.1 percent and those from national charities increased 10.4 percent.

Without a doubt, there has been a tremendous growth in donor-advised fund of late, but the question is: Will donor-advised funds continue to grow at such a rapid pace?

The National Philanthropic Trust predicts that the continued rise in the stock market suggests that there is potential for increased giving into these accounts, but uncertainty lies ahead. The implementation of a tax reform bill could reduce the tax benefits of giving to a donor-advised fund.

“As contributions slow, we predict a continued increase in grant-making and a plateau in payout rates. Grants grew 5.7 percent between 2015 and 2016, compared with a compound annual growth rate of 18.6 percent over the prior four years (2012 through 2015). Grant-making from donor-advised funds continues to reflects payout rates above 20 percent. Even with slow rates of growth in grant-making, donor-advised funds will continue to make significant grants to charities across the U.S.” — The National Philanthropic Trust